Jobs: The Crisis Continues

Whichever way you look at it, today’s employment report from the Bureau of Labor Statistics was disappointing. Many people, myself included, were expecting job creation to bounce back vigorously from last month’s flat figure, but it didn’t. Payrolls expanded by just a hundred and three thousand in December. (Based on some encouraging private surveys, a few optimists had expected the payroll number to top two hundred and fifty thousand.)

True, the unemployment rate fell sharply—from 9.8 per cent to 9.4 per cent—but that was largely because so many jobless people have given up seeking work and dropped out of the labor force. The telling figure here is that the percentage of Americans in the labor force—the so-called “participation rate”—has fallen to 64.3 per cent, the lowest level seen yet since the recession began in December 2008.

As I’ve said before, one month doesn’t make a trend, but seven months surely does. Since July of last year, net employment creation has topped a hundred and ten thousand—roughly the rate needed to keep up with increases in population—just once: in October, when payrolls jumped a healthy two hundred and ten thousand, according to the latest revision. Setting aside October, the job figures have been dismal. Just when the recovery should have been shifting up a gear and creating many more jobs, hiring has stalled.

In the past twenty years, we have gotten used to the phrase “jobless recoveries.” There was one in the early nineties and another one in the early noughties. But as a new briefing paper from the Economic Policy Institute makes clear, the Great Recession and its aftermath is “far outside the experience of any this country has seen in 70 years.”

If you doubt this is true, look at this chart:

And if you aren’t depressed enough, here are a few more figures relating to the state of the labor market:

• 4.4 million—that is the number of workers who have “disappeared” from the labor force since the recession began. If all of these folks were seeking work, the unemployment rate would be about 10.7 per cent.

• 6.4 million—the number of Americans who have been out of a job for six months or more. Long-term unemployment is turning into a massive social problem. (Any unemployment person will confirm that the longer you are out of work, the harder it is to get a job.)

• 26.1 million—the number of people who are out of work or employed in part-time jobs when they would prefer to work full-time. The so-called “underemployment rate,” which includes the unemployed and people working part-time involuntarily, is now 16.7 per cent, or about one in six.

On the plus side, things might turn up this month. With demand for many goods and services increasing at a steady (if relatively modest) clip, the reluctance of firms to go out and hire more workers can only last for so long.